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AUSSIE BONDS
AUSSIE BONDS: The Australian Office of Financial Management (AOFM) to sell
A$500mln of 2.25% May 2028 bonds, issue #TB149.
- The line was last sold on August 14, drawing an average yield of 2.6464%,
covered 4.85x. The issue has $18.8bln outstanding with a modified duration of
9.41 years.
- In the grey market the yield has fallen 2.5bp today to 2.659%.
- The AU/US 10-Year yield spread has risen 1.6bp today to 42.2bp as the US
market is hit by Trump political/economic turmoil. The spread has risen from
lows hit in early June of around 17bp and is just off a 2017 high of 46.2bp.
- ANZ note that "Australian 10 year yields are trading 2bp cheap to the average
of 2017, while US 10 year yields are 10bp rich on the same metric." While this
would usually be supportive of Aussie auctions the auction of the 3.25% April
2029 paper on Wednesday saw weak demand compared to previous issues. The issue
is slightly rich on the curve at -4bp on an ASW basis, but is near the high of
its recent range on a Z-spread basis at -4bp. Results due at 0200 London/1100
Sydney.

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